9911796707
TMI Blog1997 (1) TMI 260X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case are that the appellants are engaged in the manufacture of cast steel billets and steel ingots from waste and scrap of iron and steel, ferro alloys etc. During the scrutiny of the documents it was found that the appellants had been availing Modvat credit on Ramming Mass, Mortars, Refining Flux, Bottom Pouring Sets, Refractory Bricks, Mozolex, Refractory castables and Miscellaneous chemicals. The department alleged that Modvat credit on these items was not admissible inasmuch as these items were meant for maintaining the arc furnace and therefore fell in the excluded category. Therefore 23 show cause notices were issued to the appellants. The appellants filed a writ petition before the Hon ble High Court of Madhya Pradesh. While d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacturing process or is required to make the article marketable must be deemed to be raw material or component part of the end product and must be deemed to have been used in completion or manufacture of the end product. In support of his contention he cited and relied upon the judgments reported in 1989 (43) E.L.T. 201, 1990 (48) E.L.T. 182, 1990 (49) E.L.T. 531, 1991 (55) E.L.T. 444 (S.C.), 1992 (59) E.L.T. 572, 1992 (60) E.L.T. 509, 1992 (61) E.L.T. 489, 1995 (75) E.L.T. 735 (P. H.) and 1996 (82) E.L.T. 575. The learned Counsel submits that the Larger Bench of this Tribunal had clarified that spare parts do not come in the category of excluded items. He, therefore submits that the items on which Modvat credit has been denied are treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e refractory materials used as layers in the lining of arc furnace or for joining fire bricks and requires frequent replacement. These are being used for maintenance of arc furnace. (ii) Refining Flux :- These are actually refractory materials used in the lining and maintenance of arc furnace. (iii) Bottom Pouring Sets :- These are refractory items or fire bricks and are used under bottom pouring system to connect different moulds during pouring of molten metal and thus as appliances. (iv) Refractory Bricks :- These are refractory materials which form part of the electric arc furnace. (v) Nozolex :- These are refractory materials which form part a of electric furnace. (vi) Garnex Board :- These are Tundish linear and are used in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utilisation is in the manufacture of apparatus as furnace; that they are neither raw materials nor the inputs for the manufacture of steel; that they are not part of molten metal bath; that they are not a part of burden or the charge; that their effect on slag-metal by allowing removal of undesirable phosphorous and sulphur from the melt to the slag, their corrosion as consequence of thermodynamics of chemical reactions, which are encountered in steel making, or their effect on steel quality, do not make them the raw material or input of the metal-melt. It was contended that the material other than refractory bricks are also used as refractory bricks and therefore ratio of the judgment of this Tribunal in the case of Raipur Alloys was equa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te spares in the exclusion clause (i). There is a faint argument that if spare parts are regarded as not excluded by virtue of exclusion clause (i) and Modvat benefit is extended to such spare parts, the provision is likely to be misused and all the parts of fax machine may be purchased and brought to the factory and the parts assembled to become a full machine to be used in the manufacture of final product and that could adversely affect the Revenue. This apprehension is not justified. Spares or parts concerned in these appeals are to replace worn-out parts or parts which require replacement. In the example cited, credit will be taken of the duty paid on the parts of the machine and used to pay duty on the machine manufactured out of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contained unit, complete unit or whole unit but not any part thereof, unless of course, such part is also a complete unit in itself. The intention to exclude parts also along with machines, machinery and such other goods cannot be gathered from the language used, nor is it spelled out by necessary implication. There is a controversy as to whether the Rules of interpretation and Section notes and Chapter notes meant for classification of excisable goods for levy of duty could be relied on for interpreting the terms specified Rule 57A for excluding them from the scope of the term inputs". The same doubt may arise in regard to use of these Rules for interpreting the terms specified in Notifications. The West Regional Bench was inclinded to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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